The dollar, according to the latest warning of the Deutsche Bank research team, moves towards its worst series in the last 11 years.
In notes published this week, the George Saravelos Bank and Team Baker warned that “a great downward trend” has already begun and that the dollar could fall on the level last week 2014. years.
As the main reasons, they stated the growing distrust of American leadership, a strong increase in global fiscal consumption and the consequences of the President Donald Trump.
The warning comes after a bad start for the US currency – the dollar has fallen to the lowest level in the last 16 months, while Bloomberg Dollar Spot Index weakened almost 4% in April, which puts it on the way to the worst monthly result in more than two years.
“Prerequisites for the beginning of the great fall of the dollar are now met,” Saravelos and Baker stated. They added that recent events made them change their forecasts and that now expect a long-term descending course of the EUR / USD, which could push the dollar into a serious decline.
A structural decline in dollars and loss of investor confidence
Strategists Deutsche Bank emphasize that investors leave American markets due to increased trade tensions and the increasingly pronounced role in the U.S. on the global scene. They directly linked the fall of the dollar with Trump’s customs, which, according to their words, have now made the United States a less attractive place to invest capital.
Also, many other countries implement their own fiscal stimulus, which gives investors additional reasons to place money out of the United States, reports me investor.
One of the largest winners of this change is the euro – which strengthened over 5%, only this month and pierced the $ 1.15 border. Deutsche Bank now predicts that the euro will be the end of 2027. reach $ 1.30, which is far above the 1,15 median from the last Bloomberg survey. Such a level has not been seen more than a decade.
Strengthens and Japanese yen – according to the new projection could climb 115 yen for a dollar, which would be its strongest level from 2022. In last month, the Bank predicted a value near 125, which indicates a drastic change of tons.
American deficits and loss of economic domination
Deutsche Bank Analysts see this decline as the beginning of a slow but stable capital withdrawal from the USA. Double deficits – trade and budget – additionally make a dollar vulnerable. Also, they point out that the advantage that the United States have had as a dominant world economy beginning to pale.
“The period of American excellence that lasted for decades has already started collapse,” they wrote. They warn the “extreme uncertainty and rapidly changeable political norm” and state that the risk of “market disorders and changes in the regime” is now very high.
Crisis of trust and global redistribution of capital
This attitude coincides with the ratings of Kamakshye Trivedi, the head of foreign currency and development markets in Goldman Sachs, which this week for Bloomberg TV said that “the weakness of the dollar is there to stay”.
Saravelos, who is also a global head of the Deutsche Bank, has further elaborated this concern in Note 3. April: “We are in the middle of a dramatic change in the market regime.”
He warned that it moves towards the “wider crisis of confidence in the dollar” and that foreign currency movements increasingly reflect the panic, not market grounds. He added that basic currency fundaments could cease to play a decisive role: “Our message is that there is a risk that major changes in the global capital flows take over currencies, which could lead to chaotic movements in markets.”
Temporary dollar recovery – but without long-term trust
The dollar recovered slightly on Thursday, but not because of the improvement of the American economy. Growth followed Trump withdrew threats to the removal of the President of the Federal Reserve Jerome Powella and mitigated rhetoric in the trade conflict with China, which had some calm markets.
Still, traders warn that no one is fooled – the problems of the bucks are not solved. After falling below 140 yen formerly during the week, the dollar returned to 142.75 yen, exactly to the technical level of support that the analysts followed weeks.
